SIDBI Venture Capital has invested in Pune based Associated Powercon Equipment Ltd, a company involved in manufacturing of high-current and high-voltage rectifiers and other power-electronic products.
The money will be used by Associated Powercon for acquisition of a Swedish company Kraftelektronik AB. Kraftelektronik is a leading global player in the high current and high voltage rectifiers, and uninterruptible motor drives businesses.
This is the first cross border M&A transaction from SIDBI Venture Capital. This is an interesting deal also as Kraftelektronik is a much bigger company in revenues than Powercon. The amount of investment is undisclosed.
Ajay Kumar Kapur, CEO, SIDBI Venture Capital told VC Circle that the investment was financed by debt as well as equity. Kapur said, "Its a very interesting investment from our side. The investment rides on the core growth story of India."
The acquisition would help Powercon establish a larger global footprint with Kraftelektronik's network and product range. A release from the VC firm said that the merging companies have complementary synergies in terms of products, market and R&D capabilities.
Powercon's products have applications for metal finishing, battery formation, chlorination/ hydro generation to water treatment, and electrowinning processes, amongst many other electro chemical applications.
Private Equity Backed Acquisitions
Private equity backed acquisitions are bound to increase as valuations of companies in the developed markets are becoming more attractive due to global economic slowdown. While some funds operating in India have been backing their portfolio companies in the overseas acquisitions, a few larger deals have also been backed in the recent past.
ICICI Ventures backed its 100% controlled company RFCL to acquire US-based speciality chemicals firm Mallinckrodt Baker for $340 million.
DE Shaw backed Delhi-based Security and Intelligence Services (SIS) to acquire the guarding and patrol business units of United Technologies Corp (UTC) in Australia. The reported transaction size was $235 million for this deal.
Raman Roy-led Quatrro BPO was also backed by DE Shaw in its acquisition of UK's Babel Media.
Last year, Tano Capital invested $15 million in Mumbai based ABG Motors, a newly created arm of ABG Engineering & Construction, to fund its Italian acquisition. The company is part of Indiaâs largest private sector ship builder ABG Shipyards.
Tanoâs investment (along with promoterâs capital) were used to acquire an Italian company, Cemp, a manufacturer of flameproof electric motors, besides for setting up a manufacturing facility in Bangalore.